Indian line of credit next week

The US$500 million credit line for fuel from India would be received next week, officials said.

Negotiations on petro l e - um- linked credit lines from West Asia and other regional economies are ongoing, according to senior Central Bank officials. They said that the regulator is currently arranging high- level discussions with respective Governments to secure short to medium-term government to government financing to buttress inflows as was mentioned in the six-month road map presented on October 1. Sri Lanka needs monthly US$350 million for fuel imports when calculating against the current world market prices for fuel.

The recent Ceylon Petroleum Corporation ( CPC) tender calling for four parcels or 120,000 metric tons to supply crude oil had only one bidder from Singapore, an industry official said.

“The CPC had an issue with the banker,” an official told the Business Times. He added that to confirm a letter of credit (LC) for Sri Lanka an international bank now requests for a 3 per cent interest whereas the neighbouring countries pay 0.5 per cent to confirm LCs.

Recently two major spot trades for coal were cancelled as bids were not received. The reason is that the country is unable to conform to the international LC with over 3 per cent interest. “We need to pay higher because of low foreign reserves and country ratings,” an economist said.